Bull of the Day: Intuit Inc. (INTU)

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Benjamin Rains

Tue, Aug 1, 2023, 2:00 AM 4 min read

INTU shares have surged 30% YTD and they just hit new 52-week highs on July 31. Yet, Intuit still trades roughly 25% below its all-time highs and its growth outlook remains solid and steady, driven by the never-ending need for digital tax help and other various software in our digital-everything world.

Intuit's pitch is simple enough: Software and taxes are here to stay no matter what the future holds.

Software Everyone Needs & More

Intuit might be best known for TurboTax, but it is much more than an online tax company. Intuit sells software geared toward accounting, small business money management, and more, including QuickBooks and Mint.

Intuit bought Credit Karma in December 2020 and Mailchimp in November 2021. Alongside TurboTax, accounting, and other financial services, Inuit now provides email marketing, digital-ad services, customer-relationship-management tools, credit scores, and other personal financial services.

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Intuit boasts over 100 customers worldwide, and it grew its revenue between 11% and 32% for seven years running—the 32% came in fiscal 2022 (up 24% excluding Mailchimp). INTU has expanded its sales from under $4 billion in fiscal 2013 to $12.73 billion in FY22 (period ended on July 31, 2022).

Intuit also managed to post a nice string of big bottom-line growth for an extended period of time. Most recently, the tech firm beat our Q3 FY23 EPS estimate in late May and raised its full-year guidance.

Near-Term Outlook

Intuit’s FY23 revenue (period ended on July 31) is projected to climb by over 12% to jump from $12.73 billion to $14.30 billion, based on the most recent Zacks data. Meanwhile, its adjusted earnings are projected to soar 20% YoY to $14.22 a share. INTU’s Q4 sales are set to pop by 9.4% to boost its earnings by 25%.

Peeking ahead to INTU’s fiscal 2024, the company is projected to post 11% higher revenue and 9% stronger adjusted earnings. Intuit has topped our quarterly EPS estimates by an average of 28% in the trailing four quarters, with only one bottom line miss in the past five years. And its positive earnings revisions help Intuit land a Zacks Rank #1 (Strong Buy) right now.

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Performance and Valuation

Intuit stock has skyrocketed roughly 2,100% over the last 20 years to blow away the Zacks tech sector’s 515%. INTU also more than doubled the tech space during the trailing decade, soaring 700%. The tax software stock continued its outperformance over the past three years as well, up 64% vs. 35%.

The stock’s significant outperformance came even though it has roughly matched the tech space over the last two years, with INTU down around 4%. Intuit has, however, lagged the broader Zacks tech sector so far this year, up 31% vs. 43%. Thankfully, INTU has picked up some momentum recently, surging 13% in the last month to hit new 52-week highs on the last day of July.

Despite the climb, Intuit still trades roughly 25% below its all-time highs. Plus, INTU trades solidly above its 21-day, 50-day, and 200-day moving averages. The stock also jumped back above its 50-week moving average earlier this year, following its 2022 tumble and it found support there in early June.

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Intuit is hardly a value stock, trading at 50.1X forward 12-month earnings. But this marks a 40% discount to its own 10-year highs. The stock’s PEG ratio, which factors in its growth outlook, also showcases around 40% value vs. its decade-long high at 3.3.

Bottom Line

Intuit’s balance sheet is solid even though it made two big acquisitions over the last several years. The company also pays a dividend (yielding 0.6% right now) that it has raised by 14% annualized over the last five years. And the company has $2 billion remaining on its current share repurchase program.

Wall Street is high on the stock, with 19 of the 22 brokerage recommendations Zacks has for Intuit sitting at “Strong Buys.” This makes sense given INTU’s long history of growth in a critical, hard-to-cut-back-on area such as taxes, coupled with its expansion into new areas of business and personal finance software.

Intuit is set to release its Q4 and full-year fiscal 2023 financial results on August 24.

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